Has the patent system reached a pivotal turning point?

By Gene Quinn
February 25, 2016

path-choice-businessman-fork-335Patent law has always swung like a pendulum. Swinging between more restrictive regimes where patent owners have few meaningful rights and back to a place where patent owners enjoy strong property rights.

Generally these pendulum swings occur slowly over a generation. But over the past 10 years the pendulum has been swinging very wildly, with increasing speed, and in a decidedly anti-patent direction. A Supreme Court that has been uncharacteristically interested in patents has caused much of the disorder found in the patent system over the past decade.

The near constant disintegration of patent rights in modern times (see here, here, here, here and here) may be about to come to an end, or at least a pivotal turning point reached. The United States Supreme Court heard oral arguments on February 23, 2016, in two patent cases consolidated by the Court for consideration: Halo Electronics, Inc. v. Pulse Electronics, Inc. (14-1513) and Stryker Corporation v. Zimmer, Inc. (14-1520). These cases will force the Court to dive head first into one of the most thorny political patent issues of our time – the issue of enhanced damages for willful patent infringement. The outcome could give district court judges broad discretion to enhance damages, which would be a significant win for patent owners. See Will the Supreme Court bring balance back to the patent market?

Also on the docket for the Supreme Court this term is consideration of inter partes review in Cuozzo Speed Technologies, Inc. v. Lee. This case will require the Court to consider whether post grant challenges to patents should employ the same claim construction standards as a district court would. It is conceivable also that the Supreme Court could take this opportunity to more broadly discuss certain procedural aspects of inter partes review, and even discuss the presumption of validity, although that issue is not squarely before the Court. A reversal of the Federal Circuit in this case, which is anticipated whenever the Supreme Court takes a Federal Circuit case for review, would also be viewed as a significant win for patent owners.

Years of the Supreme Court chipping away at patent rights may come to an end in 2016. The Federal Circuit is the only Court of Appeals to handle patent appeals, which means there is no risk of a split among the Circuits. A split among the Circuits and differing law being applied in different parts of the country is one of the primary reasons the Supreme Court will take a case. That not being the case with patent appeals the Supreme Court historically has taken patent appeals from the Federal Circuit for the purpose of reversing the ruling below. See eBay v. MercExchange, KSR v. Teleflex, AMP v. Myriad, Teva v. SandozNautilis Inc. v. Biosig Instruments, Inc., Limelight Networks, Inc. v. Akamai Technologies, Inc., to name but a few. Even when the Supreme Court has agreed with the outcome reached by the Federal Circuit the reasoning and holdings have been significantly modified. See Bilski v. Kappos, for example.

Meanwhile, according 2015 statistics, patent litigation is again on the increase. Although the number of cases filed in 2015 was greater than the number of cases filed in 2014 (5,830 vs. 5,070), the number of patent cases filed in 2015 was lower still than the number of cases filed in 2013 (5,830 vs. 6,114). The Eastern District of Texas continues to lead the way with 2,540 cases filed in 2015, which represents 43.6% of all patent infringement case filings.

One can hypothesize why patent litigation is increasing again, but the short answer may be as simple as this: patent owners have weathered the worst of the patent storm. We are approaching the second anniversary of the monumental Supreme Court decision in Alice v. CLS Bank, which means that those patents that remain viable today are not so easily challenged, or have been found to pass muster.

We are also three and a half years since the dawn of the post grant challenge era. While the most recent data shows that the PTAB is instituting 80% of inter partes review petitions, there is some anecdotal evidence that the most recent months (for which data is difficult to collectively come by) the institution rate my have slipped into the 65% range. Finjan Holdings, for example, has scored a series of impressive wins at the institution stage, which may be because their patents are quite strong, the challenges were quite weak, or perhaps the PTAB is finally starting to do a more judicious job in anticipation of what will likely be a rebuke on some level from the Supreme Court.

There is also a sense of optimism in the patent market that has been missing for the last several years. At the end of 2014 people on the business side of the industry, involved with buying, selling and licensing patents were starting to whisper about the possibility that things would start to look up. No one was predicting a turn around, but the whispers in private were hopeful. By the end of 2015 the private whispers had turned into public discussions, panels seriously discussing whether a bottom had been reached or was in sight. Indeed, in November 2015, Eric Spangenberg wrote that the patent market may not quite have hit bottom, “but it feels close.” While no one seemed ready to declare a bottom had been reached, whether a bottom had been (or has been) reached is largely irrelevant. It is time to start buying again, at least selectively. After all, you can never actually time a market bottom.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 24 Comments comments.

  1. Edward Heller February 25, 2016 8:02 pm

    Gene, a lot of the problems we have has been the result of a backlash by the great and powerful to business method and software patents. eBay was a business method patent. i4i v. Microsoft was a software patent. Then we have Bilski and Alice, both business method patents. On the whole, Wall Street and Silicon Vally (save for the startup community) have turned hostile to the patent system as a whole, but particularly to software and business method patents.

    Congress reacted, first by creating 273 in response to State Street Bank, then by creating CBMs. (Personally, I think that if a claim is not deemed technological, it is virtually DOA under 101 in the PTO. CBMs are not really about prior art, but about 101.) Obama was lobbied, a has appointed a lot of Google executives to key positions. Silicon Valley executives and academics have had enormous influence on how IPRs and CBMs were structured and were run. These folks are not pro-patent.

    I would ask you to recognize this fact of life. The whole patent system is under assault in large measure because of these kinds of patents, and not because the PTO has done a bad job in examining patents as a whole. The problem is the subject matter of the patents themselves.

    Now, I do not work with business method or software patents. I work in computer architecture and circuits — old school kinds of stuff. But my practice and our business is being heavily impacted by the anti-patent spirit of the times. I hope things turn around. But we all must recognize that business method patents are dead. Ditto any software patent that does not ask the programmed computer to do work that is not otherwise eligible.

  2. Curious February 25, 2016 9:40 pm

    But we all must recognize that business method patents are dead.
    Even with Scalia’s passing, there are 5 justices that have declined to say business method patents are dead.

    Of course, people have been asking for years and years what a “business method” patent means, and we have yet to get answer more satisfying that “I know it when I see it.”

    I do not work with business method or software patents. I work in computer architecture and circuits
    That old-school bias by the hardware guys against the software guys — give it up already.

    The whole patent system is under assault in large measure because of these kinds of patents
    These “kinds of patents” are the technology of the 21st century and beyond. These “kinds of patents” have revolutionized modern life. These “kinds of patents” threaten the current oligopolies that have created the ultra-concentrated wealth of the software elite.

    Go to any public place and you’ll see multitudes of people glued to their iPhones, Androids, etc — generating wealth that funnels to an elite few. Did these mega-software companies develop their technology on their own dime? No — much of the technology these use is based upon the innovations of many others. This highly concentrated wealth is because they didn’t have to pay for the inventions others created.

    Who wants to be an entrepreneur in these industries when these oligopolies will gobble up your innovations for free and leave you high and dry? Sure, there will always be naïve idealists who think they if they build a better mousetrap, the world will beat a path to their door. However, what they don’t realize is that instead of paying for the mousetrap, these oligopolies would rather take your mousetrap, use their market power to overwhelm what pitiful marketing you could muster, and then reap all the profits of your labor. In the meantime, they’ll label you a “patent troll” and cause you to spend millions of dollars just prove your patent is valid. Given that you are unlikely to have millions of dollars to spend, the end of that story is quite predictable (and for the oligopolies, quite repeatable).

    Ned … your shtick is to say “hey … we are the good guys … the hardware guys. Don’t blame us, blame those evil software and medical diagnostic guys.” That type of attitude doesn’t win you any friends from the people who could help you in your battles. Patent law is and should always be technology-agnostic. Once we open up the can of worms as to whose technology is more important than others and who should get special treatment (for better or for worse), the special interest groups and lobbyists will turn patent law into much more of a quagmire than it already is.

    Ned — until you realize that the pro-patent, pro-innovation, pro-technology, and pro-growth group are going to stand together, as group, or fall together, as group, and act accordingly, you will continued to be rebuffed and ridiculed by those that could be your allies.

  3. Anon February 25, 2016 10:22 pm

    It does not help that Mr. Heller is exactly the type of guy that is fanning the anti-patent flames in his quest to denigrate software and business method patents.

    He tends to not recognize his own hand in any view of “lost respect.”

    Bottom line is that every anti-software patent “argument” and every anti-business method patent “argument” remains at core anti-patent arguments.

  4. Paul Morinville February 25, 2016 11:39 pm

    It seems to me that the perceived increase in patent litigation is a result of real increased patent infringement. That, of course, is a bad thing.

  5. Gerry J. Elman February 26, 2016 8:18 am


    I sure hope so. “Been Down So Long It Looks Like Up To Me” is a “cult” novel by Richard Farina, later made into “an obscure” film.

    From the Wikipedia entry about it:
    Fariña wrote the novel while a student at Cornell University. The novel is laced with pseudonym references to Cornell University (“Mentor University”), Cornellians and Ithaca landmarks. Gnossos is a gleeful anarchist, heaving creche statuary off a bridge into one of Ithaca’s famed gorges, smoking dope at fraternity parties, poking fun at the pompous, self-righteous and well-to-do, swilling Red Cap ale, retsina and martinis, while pursuing the coed in the green knee-socks and seeking karma. After a detour to Cuba during the anti-Batista revolt, Gnossos returns to “Athene” to become the inadvertent leader of the student rebellion against a university edict—this is 1958 after all—that would have banned women from men’s apartments.

    In view of the recent détente with Cuba, it seems emblematic of the pendulum swings of history that the protagonist visits that country during the “anti-Batista revolt.” And, heck, the fact that he becomes “the inadvertent leader of the student rebellion against a university edict” in the 1960s is spookily reminiscent of the fact that one Bernie Sanders was a student leader of a sit-in at my undergrad alma mater the University of Chicago back then. See http://www.motherjones.com/mojo/2016/02/bernie-sanders-core-university-chicago

    And the painted ponies go up and down.

    But nevertheless, isn’t the term “pivotal turning point” redundundant?

  6. step back February 26, 2016 9:47 am

    The observational question is not, whether the patent system has turned a corner but rather whether America as a whole has turned a corner.

    Witness last night’s Presidential debate. One of the candidates turned out to be the better WWE fight champion just like Macho Camacho of the Idiocracy movie:


    It’s no different with our Supreme Court. Our best and brightest are plucking fictional leaves off fantasy trees and wondering if such mental gymnastics mean that a DNA fragment is “identical” to what is found in hindsight in natural DNA or whether the fragment is more like a baseball bat.

    Turning the corner?
    Yeah we’ve turned a corner alright.

  7. Edward Heller February 26, 2016 9:57 am

    Curious, an iPhone is a machine. What does it have to do with patenting business methods or software that only computers numbers from numbers?

    Now you might say that iPhone patents are software patents, but what I am talking about here is the kind of patent that has consistently been held ineligible by the courts: patents on business methods: computing the improved price, reducing risk, etc. Improvements to machines, to machine processes, etc., using software are not, in my view, software patents and never have been. These are patents to machines.

  8. Anon February 26, 2016 10:40 am

    Mr. Heller, your view is simply not in accord with the norms of the Art.

  9. Gene Quinn February 26, 2016 10:40 am


    I would agree that things can’t really go anywhere but up from here (knock on wood, fingers crossed, salt thrown over my shoulder as I type this).

    Yes… pivotal turning point is redundant. I wrote it and then during the review I thought it was redundant and was going to changing it, but I just didn’t think “turning point” really captured what I was trying to say so I risked the redundancy with open eyes. Maybe it doesn’t work.

    I don’t see this as just a moment in time when one of two paths could be taken, or a point where things turn around. It should never have gotten this bad in the first place, and if these cases go the wrong way at the Supreme Court, and if the software cases pending at the CAFC go the wrong way, we will be out in the wilderness for the foreseeable future. Congress is impotent to do anything helpful. There is probably a better word than “pivotal” to use there. Perhaps “monumental turning point” would have been better.



  10. Night Writer February 26, 2016 5:15 pm

    Edward> do not work with business method or software patents. I work in computer architecture and circuits
    Curious> old-school bias by the hardware guys against the software guys — give it up already.

    That is the same problem Richard Stern has and what made Benson. It is really a form of mental illness. Both Edward and Richard fail to see the relationship between hardware and software and their equivalency. For example, any chip patent could be worked around if it was stated that all software is ineligible. But, like Alice, they want to rely on judges to use equity on every claim. Really stomach turning that people like this have destroyed our patent system.

  11. Night Writer February 26, 2016 5:18 pm

    Edward>Curious, an iPhone is a machine. What does it have to do with patenting business >methods or software that only computers numbers from numbers?

    Here is an example of the mental illness or intellectual dishonesty. With A/D converters almost any circuit can be turned into just numbers having things done with them. But, these anti-patent judicial activist ignore scientific reality. This is the stuff that made Benson. Mental illness is the only explanation I can come up with.

  12. Curious February 26, 2016 5:22 pm

    These are patents to machines.
    Patents should be to human ingenuity — no matter how applied. We shouldn’t be picking and choosing what type of human ingenuity to reward. Once we go down that path (a path we’ve already started to go down), we’ll have lobbyists (of both the Courts and Congress) try to protect their own turf by asking for what is in their own best interest — rather than the best interest of the country. Today, with extremely few exceptions, a patent attorney cannot tell a client, with reasonable certainty, whether their invention will be directed to “statutory subject matter” 3-5 years from now (when I patent would presumably issue from a patent application).

    No one knows for sure what is meant by a business method or a claim “directed to” an abstract idea. You may have your opinion, but there is little agreement among the parties. Moreover, once you introduce amorphous terms like “business method” and “abstract idea” into the law, all that does it gives a license for clever defense attorneys (working for the infringers) to find a way to cast your invention as either (so as to invalidate your patent).

    Now that the Courts have gotten away from the plain language of 35 USC 101, we have Courts (and USPTO) treating it like the famous “nose of wax” — able to be bent any which way.

    Software patents and business method patents have been patentable for decades (if not much longer), and the system didn’t break. On the contrary, the United States has enjoyed an extremely robust software industry. However, not that we’ve let the cat out of the bag, there is no current way to stop the Courts from picking and choosing what technologies are going to be incentivized and what technologies can be poached by the large players already in the market.

  13. Anon February 26, 2016 5:24 pm

    Sadly, as I posted after the Alice decision came out, I think that the turning point will be after the “car” has accelerated, slammed through the guard rails and is a smoking mess at the bottom of the ravine.

    The only way I see for a turning point prior to that is if some force stirs and reawakens the slumbering giant (and that slumbering may just be graft induced – see recent threads on the Citizen United interplay) and we have a visceral and united move to make patents strong again (vis a vis 1952) and this time we add jurisdiction stripping and a reformulation of a new Article III court (explicitly not being the Supreme Court).

  14. Night Writer February 26, 2016 5:27 pm

    Curious, you should listen to the Bork hearings from 1980’s. He talks about the right to privacy as something generated by the justices with no tether to the Constitution and how once created it can mean anything because it has no textual basis in the Constitution. Just like abstract where the justices just fabricated it and the meaning of abstract.

    But, in the end, Edward is like Richard Stern. I argued with Richard for many hours and you will never get anywhere. They have a form of mental illness.

  15. step back February 27, 2016 8:36 am

    Night Writer @11

    Mental illness is the only explanation I can come up with.

    Sadly, your fellow species mates (humans) are not who and what you think they are. Yes, most of us are delusional, mentally ill, ignorant, blissful in our mindless habits and unaware of any of it.

    Our Supremes are human (despite the title). Our district court judges are human and so too (sometimes) are our patent examiners. Ergo they all suffer from the frailty of human nature.

    Forgive them for they know not what they are. 😉

  16. Night Writer February 27, 2016 11:31 am

    You will note step back that Ned (Edward) will never address or defend his most outrageous positions. He thinks he is a very cute little boy by changing the subject or picking some minor point that is not disposition to yap about for pages. The fact is that Stern, Lemley, or Edward would go down hard in a real debate on these issues. Lemley hides behind the skirt of Stanford. I would so welcome a real debate with the likes of Lemley on functional claiming for example.

  17. Anon February 27, 2016 11:34 am

    step back,

    While the phrase is admirable, it is out of place in the “war of philosophies” that is battling over patent law.

    Such kindness should not be confused for weakness, or result in emboldening those who do would import their philosophies regardless of what Congress has put in place. When one feeds the wolf at the back door, the wolf will not go away satiated.

    This applies especially to those that should know better**, yet still seek to supplant the law with their views.

    **In the present instance, Mr. Heller is currently arguing a case related to a separation of powers doctrine, and yet would employ violations of that very same doctrine without a second thought in his views that the Supreme Court should be able to write the primary meaning of patent law.

  18. nat scientist February 28, 2016 5:28 pm

    “Improvements to machines, to machine processes, etc., using software are not, in my view, software patents and never have been. These are patents to machines.”

    That nails the paradigm shift and the book about being down and student strife in Cornellelot is better left in the dismaland of the TV imagination but “The Structure of a Scientific Revolution” Thomas S. Kuhn (1962,1970) dives deeper than emotional dramas and plates the patent revisionistas.

    and @9
    ” Perhaps “monumental turning point” would have been better.”

    vide supra

  19. Edward Heller February 29, 2016 3:46 pm

    Curious, I do not agree to the way the Supreme Court has handled 101 since Bilski. They said the problem with the Bilski claims was that they were abstract. The did not define abstract, or even tell us why the claims in Bilski were ineligible. Moreover, the majority opinion also rejected Stevens’ dissent, which argued that the Bilski claims were unpatentable business methods. So, if they were not unpatentable because they were business methods, then why were they unpatentable?

    The Federal Circuit is heading in the direction that “abstractness” has to do with “meaning.” I think the recent printed matter case that made this point should be studied.

    Regarding your point that business methods have been patentable for decades, State Street Bank came down in 1998. Bilski was 2008. I think that is one decade.

    Regarding “software” patents, prior to State Street Bank, the only kind of patents that the Federal Circuit and the Supreme Court recognized as eligible were patents on “machines.” Diehr used the program computer in a molding process. Alappat used hardware in a graphics processor for a display, but alternatively and hypothetically under the means-plus-function construction, and the claims were construed to cover a programmed computer substituting for the hardware; but still the claim was upheld because the claim was to a rasterizer, which was a component of a graphics unit for a display: a machine.

    @Night, may I remind you that every time you come up with examples of software that is patentable you come up with improvements to machines: for example the improved car. You have never come up with a single example that is different from what I agree is patentable subject matter. You seem to me making a large effort in saying that we disagree when we I believe we do not.

  20. angry dude February 29, 2016 11:47 pm

    2Edward Heller:

    Please define a “software patent”

    There is no such animal in nature

    I have a patent on fundamental dsp algorithm which can be implemented just as well in FPGA configuration or in ASIC chip – that is, in pure hardware

    Naturally I have both kinds of patent claims – method and apparatus

  21. Edward Heller March 1, 2016 7:33 am

    @21. Angry dude, you and I seem to agree that we are talking past one another on the issue of software patents all the time. To me, your DSP, a programmed, special purpose computer, is a machine. To me, software patents are not directed at new machines, but at business methods and the like, numbers in, numbers out, where the numbers themselves are not digital representations of signals. Pure math, the improved price, balanced risk, are examples where software is used to not to improve a machine but to calculate improved numbers.

    Except for Curious, every time someone here talks of their idea of a software patent, it seems to me they really are talking about improved machines, like your DSP, or the Rasterizer of Alappat, or Night’s improved car or David Kappos’ improved medical tool.

  22. angry dude March 1, 2016 10:37 am

    Edward Heller@21

    Numbers in and numbers out is exactly what my (or any other dsp) algo does

    Numbers come from A/D converter in preferred embodiment, but they can also come from anything – you can type them in manually if you have enough patience or you can feed an excel spreadsheet with some data on e.g. stock pricing – DSP algo doesn’t care what those numbers represent

    Think about Fourier transform for example – you can apply it to any kind of data, machine or no machine
    It’s the algo itself which should be patentable, not it’s application to some improved machine

  23. Edward Heller March 1, 2016 12:31 pm

    angry, doesn’t change my position that you have a special purpose machine provided you sell it as a DSP and it, without modification be used to process signals and spreadsheets.

    However, you cannot claim a GP digital computer running software that is merely loaded and executed by an end user is a special machine.

  24. angry dude March 1, 2016 3:42 pm

    Edward Heller@23

    There is no such thing as a “general purpose” computer or “special purpose” computer – anything can be made into anything

    It’s just a word game used by lawyers and judges to distract people from key issues